Why You Need to Recruit Younger ConsumersFor these smaller institutions, attracting young consumers before they develop loyalty to other credit card brands is imperative for long-term health. Credit cards generate revenue, especially among young consumers who are more likely to be “revolvers” – paying interest on their credit card debt. That said, FIS’ 2018 SMB Banking PACE Report reveals that smaller financial institutions continue to struggle to gain traction with the newly banked as well as older millennials. While 34 percent of the top 50 global banks’ retail customers are millennials, only 28 percent of community and regional banks’ customers and 23 percent of credit unions’ members fall into that age range. According to Experian, 43 percent of Americans are “revolvers.” The highest average revolving credit utilization – the ratio of revolving debt to revolving credit limits – is 37 percent, found among Gen Z and Gen X segments. Gen Z is just starting out and Gen X is the generation with the highest levels of credit card balances. As consumers age, they become more financially stable, more likely to pay off their credit card balances monthly and become less profitable for the financial institution. Experian (2018). State of Credit: 2017. Available from: https://www.experian.com/blogs/ask-experian/state-of-credit/
Targeted Marketing WorksHidden defection – buying a product, most commonly credit cards, loans or investments, from a competing financial institution – accounts for 46 percent of additional product sales, according to Bain. In its survey, 42 percent of consumers reported that they bought from a competing firm because of a special offer or advertisement. What’s most revealing is that if their primary financial institution had made the offer, more than half would have bought the product from that bank or credit union instead – money left on the table. The takeaway: Ask for your customers’ business. What do younger consumers want from their credit card providers? Studies show that the most effective way to capture younger consumers’ credit card business is through a rewards program that enables cardholders to maximize their points . Aite Group (2014). [Survey of 1,242 U.S. Consumers in Q2 2013]. The Coming Credit Card Boomlet. Available from: https://aitegroup.com/report/coming-credit-card-boomlet
Communications Are Rapidly ChangingCommunications are progressing from large real estate – print – to mobile devices, graphics, and voice-activated devices. In building marketing campaigns, it’s critical to understand how each generation is habituated to how they receive information. Think about how:
- Baby boomers are still comfortable with reading paragraphs.
- Gen Xers are accustomed to receiving information digitally.
- Millennials read graphic novels and watch movies on their mobile devices.
- Young millennials and Gen Z talk in text and speak “emoji.”